RH (RH) Q3 2026 earnings summary

Executive summary

• Net revenues for Q3 increased 8.9% year-over-year to $884 million, driven by core business growth, new product launches, and expanded hospitality offerings, despite a challenging housing market and tariff impacts.

• Net income rose to $36.3 million from $33.2 million in the prior year quarter, with diluted EPS of $1.83, up from $1.66.

• Adjusted operating margin was 11.6%, below guidance midpoint due to higher-than-expected tariff expenses.

• Generated $83 million in free cash flow in Q3; year-to-date free cash flow reached $198 million.

• Continued global expansion with the opening of RH Paris and progress on new locations in London, Milan, and Sydney.

Financial highlights

• Gross profit for the quarter increased 7.9% to $390 million, though gross margin declined 40 basis points to 44.1%.

• Adjusted EBITDA margin for Q3 was 17.6%.

• Operating income was $106 million, up from $101 million year-over-year.

• Inventory down 11% year-over-year and $82 million sequentially from Q2.

• Cash flow from operations for the nine months was $356 million, with $182 million used in investing activities and $163 million used in financing activities.

Outlook and guidance

• Q4 outlook: revenue growth of 7%-8%, adjusted operating margin of 12.5%-13.5%, adjusted EBITDA margin of 18.7%-19.6%.

• FY25 outlook: revenue growth of 9%-9.2%, adjusted operating margin of 11.6%-11.9%, adjusted EBITDA margin of 17.6%-18%, free cash flow of $250-$300 million.

• Adjusted capital expenditures for fiscal 2025 are projected at $275–$325 million, focused on new Design Galleries and infrastructure.

• Outlook includes negative margin impacts from international expansion investments and tariffs.

• Management expects continued variability in performance due to ongoing strategic initiatives and macroeconomic uncertainty.